How and When to Hire a CPA

For lots of small business owners, talking about financials makes them want to run for the hills. But hiring a CPA can actually alleviate those woes, especially when you equip your business with a CPA from the start. One of our missions at doola is to help give small business owners confidence— not goosebumps— about the backend of their business, starting with hiring a CPA.

What is a CPA?

A Certified Public Accountant, or CPA, is a certified expert in bookkeeping, prepping financial docs, and filing taxes. They’re also legally allowed to represent you against the IRS if you ever get audited or during collections.

All CPAs need to have passed the Uniform CPA Exam in order to become one. The test tackles understanding financial accounting, business taxes, reporting, tax laws, business concepts, auditing, and attestation. This is the main differentiator between a CPA and a regular accountant or bookkeeper, giving them more legal qualifications to help you control and manage your finances.

What can a CPA help me with?

1. Tax planning— not only can a CPA can do your taxes, but they can also help you plan and manage it throughout the year, whether you’re filing yearly or quarterly. No more February tax cramming alone on your laptop – now you’ve got a tax pro!
2. Financial consulting— sometimes you just need a math mind to talk to, especially when you’ve just started your business. The tax packages we offer at doola come with a 1:1 CPA consultation every year. The goal with this isn’t to hand over your financial plans for someone else to worry about; it’s to have a professional manage it so you can stay more in control.
3. Financial audits— a good CPA will come in and review your finances with a blunt, yet solution-oriented outlook. Financial audits are a great way to review what’s going on with your business so you can get a view from outside your business bubble.
4. Business ops + budgeting (aka, your very own outsourced CFO)— imagine having a financial specialist to help you with your business whenever you need it. CPAs can help you with everything from ad hoc reporting to payroll to cash management, all with a per-hour or project-based fee.
5. Forensic Accounting— we hope you’ll never have to deal with this. If your account is dealing with fraud, a forensic accountant can help draw conclusions about the culprit and maximize your recovery as best as possible.

Is a CPA worth the money?

In our opinion, it’s always a good choice to arm your business with a solid financial backbone from the beginning. You can find a CPA on your own, or use doola to link you up with one and walk you through the entire business formation process.

It’s worth noting that all CPAs are accountants, but not all accountants are CPAs. This is especially important to note when you need tasks like:

• Prepare audited financial statements
• Represent and defend a client against the IRS
• Conduct external company audits

All of which can be done by a CPA, but not by a tax accountant or regular tax professional.

What should I look for when hiring a CPA?

We suggest looking for a CPA whose registered, specializes in the specific area you need, has a fee that’s within your budget, and who makes you feel comfortable and confident in their work. Read on for our 6 steps on how to find an awesome CPA for your small business.

1. Know why you’re looking for one.

Just like all moves in your small business, understanding the why behind what you’re doing will help you visualize your outcome more clearly and set clear standards when doing your research for small business accounting. Here are some common pain points we hear from small business owners that CPAs help them solve:

• “I’ve been doing my accounting for a few years but I know I’m not managing my money properly.”
• “I haven’t even tracked my finances because it’s way too intimidating.”
• “Every March I want to crawl into a hole. I never have money set aside for taxes and always dig into my savings or go into debt.”
• “I’m being audited and I’m freaking out.”
• “There’s something wrong with my financial statements. I think I’m dealing with fraud.”

A lot of small business owners dread thinking about the financials— and it’s no fault of your own! You spent time creating a product or service that you know people will love, and finances are that extra cart that comes with the train. There’s no shame in asking for help; it’s just about taking that first action step to help solve your problem and make your business life that much easier.

Tip: know what specialization you need. Take a look back at the types of services accountants perform that we mentioned above. Use at least one of those bullet points to reference what you’re looking for.

Some small business owners deal with audits when they really need someone who will help them with business ops and budgeting. Others only really do consulting work, when you need someone to help you recover from fraud. While CPAs are technically trained in all of these areas, it’ll definitely behoove you to find one who specializes in exactly what you’re looking for.

2. Do your research.

Ask around your area to see what CPAs your community recommends. Aside from asking family and friends, you can also look in:

• Facebook groups
• Thumbtack
• Upwork
• Yelp
• Google
• Local CPA offices
• doola

Create a short list of potential CPAs based on your research.

3. Check their qualifications and license.

It might sound like a “well duh!” moment, but every year, the IRS actually releases a list called “Dirty Dozen,” which shows all of the tax scams to look out for. If something sounds too good to be true, it probably is. If a “CPA” tells you that you’ll receive tax returns you wouldn’t even dream of getting, or that they have a way for you to swerve taxes, stop the communication immediately. Tax season scams are real.

You’ll find most states on CPAVerify.org will show you where you can check a CPA’s license number and validity. If your state isn’t covered, you can type in “State Board of Accountancy in [your state]” into your search engine to look up a CPA’s license number.

You should only go ahead to step 4 once you’ve confirmed all of the CPA’s license numbers are correct. (No matter how much your friend might have your best interest, they may not have dug as deep as you!)

4. Know the fee structure and how it works with your budget.

There are three basic ways that a CPA can charge:

• Hourly— they’ll bill you based on the hours they’ve worked on your project.
• Flat— they’ll have a flat fee for a given number of deliverables. You can pay for this once a year, skip three years, or three times in one year.
• Retainer— you’ll have an ongoing fee to pay them monthly or yearly for ongoing work.

Your small business owner friend might hire an accountant yearly when you really need one on a retainer basis. Maybe you only have a few questions to ask them, and just need to pay for a consultancy. Have a general understanding of what you need before speaking with them so they can best inform you of their price.

How much do CPAs charge?

Pricing can depend on a CPA’s level of experience and where they’re located in the US. Here’s a breakdown of the average in America, noting that pricing can vastly vary across states:

The average fee of a part-time CPA in America is $36 an hour.

The average fee for individual and business tax returns for small businesses is $1,000-$1,500.

The average fee for retainer-based work from a CPA depends on how large your business is, what types of costs are associated with your work, and the complexities of it.

How much should I spend on a CPA?

Align the average price of a CPA in your area with what you need in your business. You might need an ongoing retainer so your business can run properly, which will cost more than one-off projects but will likely pay dividends later in time and peace of mind.

5. Review potential candidates (and ask them these questions).

You’ve done your research, have a budget, and rounded up your shortlist of CPAs. Send them an email, give them a call, or schedule a Zoom or in-person chat if they’re local to get to know them a bit better.

Just like every business relationship, you should work with someone you trust and feel comfortable with. Use the following questions as a guide to your conversation if you needed a few prompts:

• What got you into being a CPA, and what do you specialize in?
• Will I be working with you, or with a member of your team? (If you’re speaking with an accounting firm, you could be chatting with the owner while another CPA will actually be working with you.)
• What’s your rate, and how do you typically charge?

You should also come prepared with business-specific questions about your specific needs. Do you sell products across country lines, and want to make sure you’re in line with taxes? Is your business showing a loss but you don’t know where it’s coming from?

Tip: before signing with a CPA, make sure you review the terms in the contract. Your CPA should be able to answer questions about it, but pass it by a friend who’s worked with a CPA as well just to make sure everything looks good.

6. Start prepping your end of the work.

You know the CPA you want to work with, you’ve signed the documents, and now you’re ready to get started. Make sure you have everything you need on your end to help the process go as smoothly as possible. If they’re helping you prep your taxes, you’ll likely docs like:

• Income statements
• Expense receipts
• Tax forms
• Social Security details
• Accounting software like Quickbooks
• Any tax software you’ve used

Ask your CPA what they need to get started, and make the process as simple as possible. Not only will it save you time, energy, and money if you’re charging hourly, but it’ll give them the ability to optimize their time on the project.

Wanna save the interviewing and have it all in one place? Hi; we’re doola. 👋

Owning a small business is tough work, no matter which financial route you go. Starting your business with doola will arm you with the tools you need to start, manage, and grow your small business, with professional CPAs, business bank accounts, and tax professionals at the click of a mouse. We’ll meet you in the chat box!